Tag Archives: Adam Schenck

Without missing a beat, global equities continued their rally into 2018. In this month’s commentary, Milliman’s Joe Becker, Adam Schenck, and Jeff Greco address the following:

• After rising 1.5% in December and finishing the year 24% higher, the global equity market roared out of the gate in January, climbing 5.5% and notching its best start to a new year since 1994.
• Emerging market equities led the way, rising nearly 10% before finishing the month up 8.2%. That brings its 12-month return to 41.3%, its best since April 2010.
• With the exception of emerging market equities, volatility edged slightly higher around the globe in January, but remained in a historically low range. The VIX reached its highest level since August.
• In the United States, consumer discretionary stocks led all sectors, rising 9.2% on the month, while interest-rate-sensitive utilities lagged as the majority of the yield curve pushed sharply higher.
• The Federal Reserve left its interest rate unchanged at its January 31 meeting, but noted that, “Inflation on a 12-month basis is expected to move up this year and to stabilize around the committee’s 2 percent objective over the medium term.”

The end of 2017 will cap off the third decade of performance for the MSCI ACWI Index. Never before has it entered December with a chance to notch a full calendar year of positive monthly returns. This year it heads into December with plenty of momentum, up 23% year-to-date and with a record 13 consecutive months of positive returns.

Prior to 2017, dating back to 1988, the global equity market had recorded just one streak of 11 consecutive months of positive returns (ending February 2004). October 2017 marks the first time it has notched 12 consecutive months of positive returns.

• Equity market volatility remained historically low in September, capping off a record-setting Q3.
• September locked in a statistic for the U.S. equity market not seen since Dwight Eisenhower was president.
• A divergence of inflation metrics weighs on the Fed as it begins balance sheet normalization.

Throughout the month of June leading up to the Brexit vote, the markets appeared to have trouble deciding which way the vote would go. Equity markets began to sell off during the second week of June as Brexit appeared to be increasingly likely. On June 14, as sentiment changed and the likelihood of Brexit seemed to be waning, equity markets started to climb back to early June levels. Markets were firmly higher on the day of the vote, exhibiting confidence that Britons would choose to stay in the European Union. As vote counts came in, currency and futures markets grew increasingly volatile with the rising prospect that Brexit would prevail. The next morning, equity markets opened sharply lower, displaying the characteristics of a classic gap event. Milliman consultants Adam Schenck, Jeff Greco, and Joe Becker provide more perspective in this article.